Artificial intelligence (AI) is nothing new. It has been around since the 50s. It is only now that we possess the processing power to utilise it properly. It is already embedded in many people’s lives.
Facebook uses AI to predict your content preference and pushes that to the top of your feed.
By simple voice instruction, Siri helps iPhone users with basic tasks and research, while Netflix uses advanced predictive technology to suggest shows to users based on their selected viewing preferences or ratings.
Soon AI will drive our cars, stock our warehouses and take care of our loved ones. It holds much promise, and industry players say it is on the brink of explosion.
In 2018, $19.1-billion was spent on AI on a global scale, according to RMB’s Fintech in Motion Report that was released last week. Spend is forecast to grow to$52.2-billion by 2021.
In 2018, an increase of 54.2% was achieved year-on-year. RMB forecasts compound annual growth rate of 462% over the 2016-2021 period in AI activity around the world.
The trend is also picking up in pace in South Africa. According to the AI Maturity Report in South Africa, commissioned by Microsoft and conducted by Ernst & Young, local organisations invested around R23.5-billion in AI over the last decade. The findings were made public on 11 June, and indicate that AI pilots and experimentation are now prolific across South African companies, with businesses showing a willingness to embrace AI and experiment using new technology.
In fact, 46% of South African companies say they are already actively piloting AI within their organisations.
The study is based on surveys, interviews and case studies from 112 companies across the Middle East and Africa (MEA).
In SA, the study surveyed brands like MTN, Discovery, Standard Bank, De Beers, TymeBank, BCX, Hello Group, Nampak and Medscheme, among others.
Local asset managers and financial advisers are also realising its potential.
AI has the ability to significantly enhance products, simplify processes and reduce costs in financial services, says Ronald Richman, an actuary with a QED Actuarial Consultants, specialising in data science and analytics.
He describes AI as the process of teaching computers to complete tasks previously the exclusive domain of humans, by feeding them large volumes of data.
“This approach is commonly referred to as machine learning and the benefit is that computers can complete data-based tasks much faster and with potentially greater accuracy than humans,” he adds.
According to Richman, data is at the core of many financial services products.
“The more relevant data is collected accurately and processed through AI techniques, the more this industry can be transformed for the benefit of consumers.
“Hopefully, as these techniques mature, innovative products will lead to consumers being provided with more comprehensive cover at competitive prices,” he adds.
“Increasingly, we will see fintech insurers such as the US-based Lemonade enter the market, using AI to issue policies quickly and to pay claims within minutes. The benefit to consumers is a quick and simple process that does not require endless paperwork. Already, we see South African start-ups bringing these products to market.”
AI is also being rolled out by South African asset managers like Old Mutual to enhance returns at a much lower cost. In February this year, Sanlam launched a collective investment scheme (CIS) that is managed by AI to achieve consistency in returns by removing human emotions from investment decisions.
There seems to be a general consensus that AI will by no means make the work done by financial professionals redundant since results produced by AI models still require human interpretation, particularly to ensure that the models are being used in an ethical manner, consistent with regulatory requirements and expectations.
Ahmore Burger-Smidt, information technology specialist and director at Werksmans Attorneys, says it will, however, force advisers to compete more effectively, improve their customers’ experiences, and provide new value-added services.
She says for a very long time, investment advisers looked in the rear-view mirror to formulate investment decisions that should inform the future. “AI now enables, to forecast with greater accuracy the various implications of different investment decisions.
“We should be reminded that AI can help integrate and monitor data from a huge set of sources and identify what is important and what matters to individual clients,” she adds.
As the folks at the McKinsey Global Institute pointed out in a recent white paper – Tech for Good – technology “has no overall purpose of its own; its effects are driven by human choices and actions”. In the case of business, AI can be used to automate all sorts of back-office functions – saving money and cutting costs, but also eliminating jobs. Or it can be used to reinvent products and services to create new value for customers. BM
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